Top Tips for Purchasing a Buy-to-Let Property – the Process Explained

Joanne LerwillPurchasing a buy-to-let property can seem like an attractive investment – with investors collecting rental income and relying upon steadily increasing property prices. Despite the slowdown in house price increases, the number of renters continues to climb. There are important considerations about purchasing a buy-to-let property and being a landlord – whether you have a portfolio of properties or are just starting out.

Our specialist solicitor, Joanne Lerwill, takes a look at the process of purchasing a buy-to-let mortgage and the recent changes that have come into force.

How can a solicitor help someone purchase a buy-to-let property?

A solicitor can give advice and guide you through the legal complexities of buying a property to rent out.

Are there any differences between the process of purchasing a residential property and a buy-to-let?

Whilst a buy-to-let mortgage is a lot like a residential mortgage, there are noticeable differences. Firstly, the fees tend to be much higher. Additionally, so too are the interest rates. Furthermore, the minimum deposit for a buy-to-let mortgage is usually 25% of the property’s value. Finally, you are liable for the higher rate Stamp Duty (in England), or the Land Transaction Tax (in Wales).

What are the rules around the letting fee ban which came into force in 2019?

The new law, taking effect from 1st April 2019, means tenants will no longer face fees for services, including viewings, credit checks, references and setting up a tenancy. However, it is entirely possible that these additional costs, once eliminated, will raise the tenant’s rent.

What are the other main considerations with buy-to-let properties?

The biggest consideration for anyone thinking about a buy-to-let mortgage is financial. Firstly, you will require a larger deposit to make the purchase. Secondly, the mortgage is generally based upon the rent, rather than your income. To cover the mortgage and expenses of running the property, in addition to making a profit, you need to charge high enough rent.

What top three tips would you give to someone purchasing their first buy-to-let property?

  • Number one – Research the market! This cannot be understated. Ask yourself, what do you know about the market? Are you sure this is an investment you want to commit to? It is important to consider the risks as well as the benefits.
  • Number two – Do not rush the process and look around for the best buy-to-let mortgage deal. It pays dividends to speak to a good independent broker and your bank. They will explain what deals are available and which one is right for
    you
  • Number three – Above all, think about your target tenant. Who are they and what do they want? Will you rent to students, young professionals or a family?

How can we help?

The CJCH conveyancing team has over 35 years’ experience in property matters. Your matter is expertly managed by qualified solicitors and conveyancers, ensuring you are in safe hands.

Get in touch via:

Telephone: 0333 231 6405

Email: privateclients@cjch.co.uk

In the event that you encounter difficulties with your tenant/s any time after completion, get in touch with our Litigation Team on 029 20 483181 who have the necessary expertise to assist whatever the problem.

Landlord and tenant issues: How long are you willing to wait to recover possession of your property?

By Nerys Thomas.

Generation rent (generation of young people living in rented accommodation with little immediate chance of becoming home owners due to the high cost of property) is an ever-increasing reality within the UK.  Whilst this is good news for landlords, whether they have one rental property to their name or those with large property portfolios, being a landlord can at times be compared to a costly roller coaster experience, especially when attempting to recover possession of your property.

Fundamentally, no landlord can recover possession of their property without the tenant providing vacant possession or the court ordering for the tenant to vacate.  If the tenant does not leave the property following a court order being obtained, landlords must then apply for a court approved bailiff to undertake an eviction.  All of which can become an expensive and time-consuming situation, where the landlord is usually already aggrieved e.g. unpaid rent.        

The Ministry of Justice published statistics in November 2017 surrounding landlord possession proceedings.  It is pleasing to note from this publication that the actual number of possession claims directed to court are slowly reducing, but those claims which are directed to court have seen the time frames for the matters being addressed marginally increasing.  On average, the Ministry of Justice inform us that it could take 11.4 weeks from the filing of a claim at court to getting a possession order.  This means that if your tenant has fallen into rent arrears and you have served the appropriate notice it will take, on average, just shy of three months from filing your claim at court to the matter being considered by a Judge.  That would potentially be three further months where rent is not being paid.

It is detailed in the Ministry of Justice report that it will take on average 41.2 weeks from the date of issuing a claim at court for possession to actually recovering possession, should a tenant fail to adhere to the court order requiring that he/she vacates, and a court approved bailiff is employed to undertake an eviction.  Once again, if the reason for pursuing possession is rent arrears, this time frame is likely to result in an eye-watering debt owed to the landlord.     

Please note that the Ministry of Justice statistics have been collated across England and Wales, therefore the true situation in your local court may vary depending on the court’s workload.  Nevertheless, the figures are a clear warning for landlords to try and protect themselves where possible.

At CJCH Solicitors, we have the experience and knowledge of providing an all-encompassing service in relation to landlord and tenant matters, whether this is to safeguard the landlord prior to entering into a rental agreement; when disputes have arisen or to recover possession and/or rent arrears through the court process.  Should you wish to discuss your situation further or seek assistance with a dispute, contact Nerys Thomas at disputeresolution@cjch.co.uk or by telephone on 0333 231 6405.